The 55 Public Square office tower in downtown Cleveland is slated to become a mixed-use building, with apartments on the lower floors and offices upstairs, after a sale to the K&D Group.
(Michelle Jarboe/The Plain Dealer)

CLEVELAND, Ohio - The K&D Group, one of downtown's largest landlords, is taking on yet another center-city redevelopment project - the acquisition and renovation of a half-empty office tower on Public Square.

K&D confirmed Wednesday that it has inked a deal to buy 55 Public Square, a 22-story tower northwest of the square. The purchase, at an undisclosed price, also will include a seven-story garage and the former John Q's Steakhouse space, which has been vacant for years.

The sale is scheduled to occur within 75 days. The seller, an affiliate of Optima Ventures of Miami, Florida, paid $34 million for the complex in 2008. The Cuyahoga County Fiscal Office estimates that the property, in dire need of a makeover, is worth $20.7 million today.

"It's a desirable building in a desirable location," said Doug Price, K&D's chief executive officer. "It just needs a lot of love."

Though K&D is best known as a dominant player in Northeast Ohio's apartment market, the company views 55 Public Square as a mixed-use project. The tower's second through 11th floors, home to just a smattering of businesses today, will become 150 apartments after K&D consolidates office tenants upstairs.

That approach follows K&D's recent model of lining up a steady pipeline of projects that mix commercial space and housing, then launching construction at one building as the previous redevelopment wraps up.

At 55 Public Square, K&D hopes to hang onto as many existing office tenants as possible, said Rico Pietro, a real estate broker representing the developer on the purchase.

"The idea is to immediately start doing the commercial components of it - the garage, lobby renovations and reworking of tenant spaces to build some goodwill and keep the tenants that would like to stay," said Pietro, a principal with Cushman & Wakefield Cresco Real Estate in Independence.

Price wouldn't put a figure on the potential costs of renovations, which also will include new heating and cooling systems and elevator work. The garage, which he described as his "top priority," will stay open during construction, which could start late this year.

Completed in 1958 and formerly known as the Illuminating Building, 55 Public Square is eligible - due to its age and location in a historic district - for federal and state tax credits that encourage historic preservation and offset some of the costs of renovations. Price hopes to file the necessary paperwork this year and to enter a competition for state credits in the fall.

The largest tenants in the building are First National Bank, on the 14th floor, and Law Offices of Cleveland, an umbrella organization that rents 21st-floor space to attorneys and small law firms.

Optima has been marketing the building for sale, off and on, for a few years. For a brief period in early 2017, the city of Cleveland considered moving its police headquarters to leased space at 55 Public Square; however, legislation related to that deal never went anywhere, and the city turned its attention to other properties.

Price said the building is a logical addition to K&D's sizable portfolio, which includes not only Terminal Tower but also the Post Office Plaza offices connected to Tower City.

"We like to stay in the areas we're in," he said. "We're very invested in Public Square."